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Government Spending Across Domestic Borders

Khaos_Mage
Posts: 23,214
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11/8/2014 8:48:13 AM
Posted: 2 years ago
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?
My work here is, finally, done.
Greyparrot
Posts: 14,291
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11/8/2014 9:00:06 AM
Posted: 2 years ago
At 11/8/2014 8:48:13 AM, Khaos_Mage wrote:
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?

I'm sure the govt is trying to save a buck.
Greyparrot
Posts: 14,291
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11/8/2014 9:02:03 AM
Posted: 2 years ago
Patriotism and economics don't mix.

If we all bought American and banned all foreign imports, everything would cost way more. People would have a lower standard of living.
Khaos_Mage
Posts: 23,214
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11/8/2014 9:21:41 AM
Posted: 2 years ago
At 11/8/2014 9:02:03 AM, Greyparrot wrote:
Patriotism and economics don't mix.

If we all bought American and banned all foreign imports, everything would cost way more. People would have a lower standard of living.

I'm not saying Americans shouldn't import. I am saying the government shouldn't be buying their goods/services from outside their respective jurisdiction, if it can be avoided.

For example, the IRS should not be buying paper from Canadian paper mills, only the USA. Or, at least, from an American company that sells Canadian paper.

If city hall needs a plumber, don't you think they should call someone from their own city if possible?
My work here is, finally, done.
Greyparrot
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11/8/2014 9:32:55 AM
Posted: 2 years ago
At 11/8/2014 9:21:41 AM, Khaos_Mage wrote:
At 11/8/2014 9:02:03 AM, Greyparrot wrote:
Patriotism and economics don't mix.

If we all bought American and banned all foreign imports, everything would cost way more. People would have a lower standard of living.

I'm not saying Americans shouldn't import. I am saying the government shouldn't be buying their goods/services from outside their respective jurisdiction, if it can be avoided.

For example, the IRS should not be buying paper from Canadian paper mills, only the USA. Or, at least, from an American company that sells Canadian paper.

If city hall needs a plumber, don't you think they should call someone from their own city if possible?

Isn't government inneficient enough as it is that you wouldn't allow them to purchase much cheaper Canadian drugs?
Khaos_Mage
Posts: 23,214
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11/8/2014 9:39:52 AM
Posted: 2 years ago
At 11/8/2014 9:32:55 AM, Greyparrot wrote:

Isn't government inneficient enough as it is that you wouldn't allow them to purchase much cheaper Canadian drugs?

That's not the issue.
If tax revenue helps the business by purchasing, it in turn generates more tax revenue, or at least, more expenses. If the government is too encourage spending, as it is often citing for doing with the multiplier effect, then why not do it locally?
Given the multiplier effect, the cost may not actually be cheaper overall.

It just seems hypocritical to me to do otherwise, if that is your angle.
Keeping in mind the "liberals" are more likely to argue local economies and stimulus spending, so you'd think they'd care more about this.
My work here is, finally, done.
Greyparrot
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11/8/2014 9:51:22 AM
Posted: 2 years ago
At 11/8/2014 9:39:52 AM, Khaos_Mage wrote:
At 11/8/2014 9:32:55 AM, Greyparrot wrote:

Isn't government inneficient enough as it is that you wouldn't allow them to purchase much cheaper Canadian drugs?

That's not the issue.
If tax revenue helps the business by purchasing, it in turn generates more tax revenue, or at least, more expenses. If the government is too encourage spending, as it is often citing for doing with the multiplier effect, then why not do it locally?
Given the multiplier effect, the cost may not actually be cheaper overall.

It just seems hypocritical to me to do otherwise, if that is your angle.
Keeping in mind the "liberals" are more likely to argue local economies and stimulus spending, so you'd think they'd care more about this.

Broken window fallacy. The government doesn't help the economy more by paying more for public services than if they could outsource for less.
Khaos_Mage
Posts: 23,214
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11/8/2014 10:07:44 AM
Posted: 2 years ago
At 11/8/2014 9:51:22 AM, Greyparrot wrote:

Broken window fallacy. The government doesn't help the economy more by paying more for public services than if they could outsource for less.

Not necessarily.
If revenues increase, taxes increase, thus the government reclaims some of its cost back.

And, this is clearly an issue of creating commerce; there is no fallacy.
There is a broken window, and someone needs to fix it.
Assume a broken window at the governor's mansion, and they hire someone out of state. Whatever multiplier effect that money generates is not going to benefit the former's state. If there is no multiplier effect, then that revenue is taxed and it benefits the latter's state. I see no reason for this, if it can be avoided.
My work here is, finally, done.
Greyparrot
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11/8/2014 10:45:32 AM
Posted: 2 years ago
At 11/8/2014 10:07:44 AM, Khaos_Mage wrote:
At 11/8/2014 9:51:22 AM, Greyparrot wrote:

Broken window fallacy. The government doesn't help the economy more by paying more for public services than if they could outsource for less.

Not necessarily.
If revenues increase, taxes increase, thus the government reclaims some of its cost back.

And, this is clearly an issue of creating commerce; there is no fallacy.
There is a broken window, and someone needs to fix it.
Assume a broken window at the governor's mansion, and they hire someone out of state. Whatever multiplier effect that money generates is not going to benefit the former's state. If there is no multiplier effect, then that revenue is taxed and it benefits the latter's state. I see no reason for this, if it can be avoided.

You don't understand the broken window fallacy window then. The opportunity lost from the locals paying extra for a public service is greater than the actual service.
wrichcirw
Posts: 11,196
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11/8/2014 10:46:45 AM
Posted: 2 years ago
At 11/8/2014 8:48:13 AM, Khaos_Mage wrote:
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?

I would think there would be blowback, especially since so many politicians are hyperfocused on creating jobs in their jurisdiction. Can you cite an instance where this occurs?
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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11/8/2014 10:53:46 AM
Posted: 2 years ago
At 11/8/2014 9:51:22 AM, Greyparrot wrote:
At 11/8/2014 9:39:52 AM, Khaos_Mage wrote:
At 11/8/2014 9:32:55 AM, Greyparrot wrote:

Isn't government inneficient enough as it is that you wouldn't allow them to purchase much cheaper Canadian drugs?

That's not the issue.
If tax revenue helps the business by purchasing, it in turn generates more tax revenue, or at least, more expenses. If the government is too encourage spending, as it is often citing for doing with the multiplier effect, then why not do it locally?
Given the multiplier effect, the cost may not actually be cheaper overall.

It just seems hypocritical to me to do otherwise, if that is your angle.
Keeping in mind the "liberals" are more likely to argue local economies and stimulus spending, so you'd think they'd care more about this.

Broken window fallacy. The government doesn't help the economy more by paying more for public services than if they could outsource for less.

It's not at all fallacious, and you're not citing the fallacy correctly.

The fallacy is about breaking a window so that you generate economic activity by fixing it, which is not what KM is talking about. What KM is talking about is creating economic activity within a polity instead of creating economic activity outside the polity. That economic activity would then be subject to the multiplier effect...it would behoove any polity to keep that activity within its own borders if it could.

I mean, we outsource a ton to developing countries, and those developing countries are experiencing orders of magnitude of growth higher than ours. This relationship is causal, not just correlation.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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11/8/2014 11:11:00 AM
Posted: 2 years ago
At 11/8/2014 11:00:06 AM, Greyparrot wrote:
First off, growth does not equal prosperity necessarily.

Standards of living fall as prices rise.

You're citing the difference between nominal (inflation) and real growth. Actual economic activity generated by the multiplier effect is real growth.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Greyparrot
Posts: 14,291
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11/8/2014 12:00:36 PM
Posted: 2 years ago
A person can make 2 widgets in the same time and work to fix a road worth one widget.

The government pays him the price of 2 widgets to fix 1 road (still valued at one widget). The village is taxed 2 widgets.

The village would have been better off if the guy sold 2 widgets to (insert outsourcer) while the outsourcer fixed the road for 1 widget.
Ore_Ele
Posts: 25,980
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11/8/2014 3:14:48 PM
Posted: 2 years ago
At 11/8/2014 8:48:13 AM, Khaos_Mage wrote:
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?

It is beneficial to hire "closer to home" when you can, though it really depends on the price difference. It is important to know that it isn't "money" that makes the economy run, but the exchange of money for services and products that does.

Let's say I am the Lord Dictator of a miscelanious City State and we have a 20% income tax. I have a bridge to somewhere that needs to be built. I can hire group A from within my city state, or group B from outside. First off, since group A will be paying income tax, I can already afford to pay them 25% more (since if I pay them 1.25*$X, 20% of that is 0.25*$X which means I'm only out $X, the same if I went with group B), so even if I "pay" more, it can still save money.

We also have that the money will continue to circulate. Let's say that company pays the site workers about 40% of the contract and 60% goes to administrative and profits. Now the site workers will be in the area regardless (since they are building the bridge) and will need to buy food, go out for entertainment on the weekends, etc. So some of that 40% will go back into the local economy. However the 60% will not be going into the local economy as it will go back to wherever the admin headquarters are. If it is a local company, all 100% will stay local.

Of course, it is possible for the savings of doing something non-domestically, outweighs the benefits of doing it domestically (especially if there is a quality difference).
"Wanting Red Rhino Pill to have gender"
Ore_Ele
Posts: 25,980
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11/8/2014 3:33:14 PM
Posted: 2 years ago
At 11/8/2014 12:00:36 PM, Greyparrot wrote:
A person can make 2 widgets in the same time and work to fix a road worth one widget.

The government pays him the price of 2 widgets to fix 1 road (still valued at one widget). The village is taxed 2 widgets.

The village would have been better off if the guy sold 2 widgets to (insert outsourcer) while the outsourcer fixed the road for 1 widget.

You are presuming there is an unlimited demand for widgets to where he can just go make more. In cases of construction, they are contract based so it is not always the case where the government is taking them from another contract. Sometimes it is either that contract or twiddling their thumbs (which is not a more efficient use of time).
"Wanting Red Rhino Pill to have gender"
Greyparrot
Posts: 14,291
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11/8/2014 5:25:00 PM
Posted: 2 years ago
At 11/8/2014 3:33:14 PM, Ore_Ele wrote:
At 11/8/2014 12:00:36 PM, Greyparrot wrote:
A person can make 2 widgets in the same time and work to fix a road worth one widget.

The government pays him the price of 2 widgets to fix 1 road (still valued at one widget). The village is taxed 2 widgets.

The village would have been better off if the guy sold 2 widgets to (insert outsourcer) while the outsourcer fixed the road for 1 widget.

You are presuming there is an unlimited demand for widgets to where he can just go make more. In cases of construction, they are contract based so it is not always the case where the government is taking them from another contract. Sometimes it is either that contract or twiddling their thumbs (which is not a more efficient use of time).

Read the OP oregon!
twocupcakes
Posts: 2,750
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11/9/2014 2:04:43 PM
Posted: 2 years ago

Broken window fallacy. The government doesn't help the economy more by paying more for public services than if they could outsource for less.

It is definitely better for the government to pay for domestic stuff than from other countries. They would employ and help the local economy and people.
twocupcakes
Posts: 2,750
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11/9/2014 2:05:58 PM
Posted: 2 years ago
At 11/8/2014 8:48:13 AM, Khaos_Mage wrote:
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?

I agree that is is better for the government to spend local.

The only problem I see, is that other countries may not like when Americans importing and will enact there own laws to prevent their citizens from importing American products.
Greyparrot
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11/9/2014 2:31:47 PM
Posted: 2 years ago
At 11/9/2014 2:05:58 PM, twocupcakes wrote:
At 11/8/2014 8:48:13 AM, Khaos_Mage wrote:
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?

I agree that is is better for the government to spend local.

The only problem I see, is that other countries may not like when Americans importing and will enact there own laws to prevent their citizens from importing American products.

Do you think we should abolish import trade with China for cheap goods so Walmart will be forced to buy American?
Ore_Ele
Posts: 25,980
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11/9/2014 3:52:44 PM
Posted: 2 years ago
At 11/8/2014 5:25:00 PM, Greyparrot wrote:
At 11/8/2014 3:33:14 PM, Ore_Ele wrote:
At 11/8/2014 12:00:36 PM, Greyparrot wrote:
A person can make 2 widgets in the same time and work to fix a road worth one widget.

The government pays him the price of 2 widgets to fix 1 road (still valued at one widget). The village is taxed 2 widgets.

The village would have been better off if the guy sold 2 widgets to (insert outsourcer) while the outsourcer fixed the road for 1 widget.

You are presuming there is an unlimited demand for widgets to where he can just go make more. In cases of construction, they are contract based so it is not always the case where the government is taking them from another contract. Sometimes it is either that contract or twiddling their thumbs (which is not a more efficient use of time).

Read the OP oregon!

I did read the OP, I even went and re-read it. It doesn't contradict my objections. You mentioned the example that someone could make two widgets themselves or be paid two widgets by the government to build a road worth one widget. However I pointed out that in many cases, contractors are not so work heavy that they just have other contracts lying around. It may be that they do a contract for the government or twiddle their thumbs until the next contract comes around from the private sector.
"Wanting Red Rhino Pill to have gender"
twocupcakes
Posts: 2,750
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11/9/2014 4:11:26 PM
Posted: 2 years ago
At 11/9/2014 2:31:47 PM, Greyparrot wrote:
At 11/9/2014 2:05:58 PM, twocupcakes wrote:
At 11/8/2014 8:48:13 AM, Khaos_Mage wrote:
It's funny when you have people talk about "the local economy", and how spending money at a corporation is bad it, because the money goes elsewhere.

In that same vein, do you think there should be a law prohibiting, or even blowback politically, from the federal government if they hire non-domestic companies to do their work domestically?
How about a state agency, like the MN Dept of Transportation, hiring contractors from out of state for road construction or sign installation?
How about a city government hiring people from another city, let alone another county, for city work like trimming trees in parks or sewer line repairs?

I see this at work a bit, and I find it annoying and wonder if cronyism is in play.
Thoughts?

I agree that is is better for the government to spend local.

The only problem I see, is that other countries may not like when Americans importing and will enact there own laws to prevent their citizens from importing American products.

Do you think we should abolish import trade with China for cheap goods so Walmart will be forced to buy American?

I think that all else equal it is way better to purchase locally.

There is also benefit to importing good that are much cheaper. But, often it is more beneficial to the economy to purchase local goods even if it is more expensive.
Greyparrot
Posts: 14,291
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11/9/2014 4:30:34 PM
Posted: 2 years ago
At 11/9/2014 3:52:44 PM, Ore_Ele wrote:
At 11/8/2014 5:25:00 PM, Greyparrot wrote:
At 11/8/2014 3:33:14 PM, Ore_Ele wrote:
At 11/8/2014 12:00:36 PM, Greyparrot wrote:
A person can make 2 widgets in the same time and work to fix a road worth one widget.

The government pays him the price of 2 widgets to fix 1 road (still valued at one widget). The village is taxed 2 widgets.

The village would have been better off if the guy sold 2 widgets to (insert outsourcer) while the outsourcer fixed the road for 1 widget.

You are presuming there is an unlimited demand for widgets to where he can just go make more. In cases of construction, they are contract based so it is not always the case where the government is taking them from another contract. Sometimes it is either that contract or twiddling their thumbs (which is not a more efficient use of time).

Read the OP oregon!

I did read the OP, I even went and re-read it. It doesn't contradict my objections. You mentioned the example that someone could make two widgets themselves or be paid two widgets by the government to build a road worth one widget. However I pointed out that in many cases, contractors are not so work heavy that they just have other contracts lying around. It may be that they do a contract for the government or twiddle their thumbs until the next contract comes around from the private sector.

You are not stating anything new. To state that local contacts are usually scarce is the status quo. To make the claim that it is better for the economy when the local government pays a hefty premium for these scarce local contracts is an entirely different story.

Perhaps you have the same opinion as the user 2 cupcakes.

As follows:

I think that all else equal it is way better to purchase locally.

Often it is more beneficial to the economy to purchase local goods even if it is more expensive.
Khaos_Mage
Posts: 23,214
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11/10/2014 1:18:28 PM
Posted: 2 years ago
At 11/8/2014 10:46:45 AM, wrichcirw wrote:

I would think there would be blowback, especially since so many politicians are hyperfocused on creating jobs in their jurisdiction. Can you cite an instance where this occurs?

I see it on a small scale all the time.
I work for 811, and I see Wisconsin contractors doing work for MNDOT. ND ones, too.
I've even seen out of state, county, and city workers doing work for the city, like planting trees in parks or removing stumps along boulevards.

It's not really major or publicized, but it does add up. And, I can kind of see city/counties, since there aren't many that have a city/county tax, so there is no real recapture through taxes/growth.
A major one was the MN Vikings stadium, which is largely publicly funded, went with, IIRC, an out of state outfit, who also charged more. There was outrage from that, but that is tens of millions (or even billions) of dollars.
My work here is, finally, done.
Ore_Ele
Posts: 25,980
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11/12/2014 2:28:57 PM
Posted: 2 years ago
At 11/9/2014 4:30:34 PM, Greyparrot wrote:
At 11/9/2014 3:52:44 PM, Ore_Ele wrote:
At 11/8/2014 5:25:00 PM, Greyparrot wrote:
At 11/8/2014 3:33:14 PM, Ore_Ele wrote:
At 11/8/2014 12:00:36 PM, Greyparrot wrote:
A person can make 2 widgets in the same time and work to fix a road worth one widget.

The government pays him the price of 2 widgets to fix 1 road (still valued at one widget). The village is taxed 2 widgets.

The village would have been better off if the guy sold 2 widgets to (insert outsourcer) while the outsourcer fixed the road for 1 widget.

You are presuming there is an unlimited demand for widgets to where he can just go make more. In cases of construction, they are contract based so it is not always the case where the government is taking them from another contract. Sometimes it is either that contract or twiddling their thumbs (which is not a more efficient use of time).

Read the OP oregon!

I did read the OP, I even went and re-read it. It doesn't contradict my objections. You mentioned the example that someone could make two widgets themselves or be paid two widgets by the government to build a road worth one widget. However I pointed out that in many cases, contractors are not so work heavy that they just have other contracts lying around. It may be that they do a contract for the government or twiddle their thumbs until the next contract comes around from the private sector.

You are not stating anything new. To state that local contacts are usually scarce is the status quo. To make the claim that it is better for the economy when the local government pays a hefty premium for these scarce local contracts is an entirely different story.

Perhaps you have the same opinion as the user 2 cupcakes.

As follows:

I think that all else equal it is way better to purchase locally.

Often it is more beneficial to the economy to purchase local goods even if it is more expensive.

It depends on how much more expensive it is. There is a benefit (as I listed). That benefit has a value. If the value is greater than the price difference, then it should be done. If the price difference is greater than the value, then still go outside the bubble.
"Wanting Red Rhino Pill to have gender"